State and federal governments must take the lead in making housing affordable

Housing affordability is determined by a range of factors such as the supply versus demand for housing in an area, interest rates and household incomes. Some of these factors are outside government control, but there are things that governments can do to make access to housing more equitable across the community.

For example how governments allocate their money plays a big role, with the impacts of such decisions lasting well beyond terms of government. Over the last 60 years, home ownership has become the dominant form of housing in Australia and is now entrenched in the national psyche. At the same time, the role that governments have played in creating this environment goes almost unnoticed by the public.

When governments create financial incentives that encourage home ownership, they’re inevitably giving up revenue that could be used elsewhere. For example, in 2008 the Select Committee on Housing Affordability estimated that that the federal government loses around $8 billion per year through negative gearing and capital gains discounts given to homeowners. If the discounts weren’t granted, the money gained could be spent on initiatives that make housing more affordable such as income support, updating and increasing public housing stock or setting up a rental affordability scheme. More information on negative gearing and capital gains tax can be found on the Australian Taxation Office’s website.

There are things that governments, both state and federal, can do to help make housing more affordable and in turn guarantee housing for people on the lowest incomes. Focusing on the state government, a few of the measure that can be considered are:

1. Inclusionary zoning

A portion of new multi-unit developments is set aside for public housing through legislation. The legislation mandates that the development must include a certain percentage of below market rate housing units.

2. Inclusionary approvals

Local governments put conditions on developments with a minimum requirement for social housing. This is not as strong a protection as inclusionary zoning, as it’s difficult for local councils to improve access to affordable housing without state and federal government support.

3. Density bonuses

Higher density developments are approved on the basis of social housing being included.

Schemes like inclusionary zoning and density bonuses also increase private investment in low-cost housing, helping to create communities of people from a variety of backgrounds and experiences. If housing is to be guaranteed for everyone, state and federal governments will need to take the lead by creating incentives for investment in public housing, not just home ownership.